Seib & Wessel: Jason Furman on Debt Ceiling Impact

10/3/2013 2:42PM

In an interview with WSJ's David Wessel, Council of Economic Advisors Chairman Jason Furman discusses what the economic impact would be if Congress fails to raise the debt ceiling and why health care reform is a boost, not a burden, to the economy.

This transcript has been automatically generated and may not be 100% accurate.

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David Wessel Wall Street Journal I'm joined today by Jason Furman me all along been Mr. ... two months two months the chairman of the president's Council of Economic Advisers ... let me start with one question about where we are right now ... the financial markets seem reasonably complacent as if somehow this is a game the Washington plays and ... before the shutdown goes on too long importantly before and that government actually runs out of cash ... all those lunatics a Washington will come together and do the right thing ... to think the markets are misjudging what's going on ... well that that I don't ... want to tell you I know exactly what the market should or should be doing ... what we try to do is share information with a public share information with markets ... and right now the information is the friend who are worried ... about ... the capacity of Congress to raise the debt ceiling in the last time ... um we had this today in two thousand eleven ... just that debate itself was damaging to the economy the Treasury put out a new report today ... that shows that ... and we don't want to come up well ... against midnight ... and given some of the dysfunction ... in one faction of one party one chamber of Congress ... it is all but worrisome to ... see how the Guinea get through ... this ... despite the White House's insistence that you would use something like the fourteenth amendment are made of platinum Korean ... kick in tomorrow if Congress ... fails to raise the debt ceiling is continued speculation that ... all in the last minute you'll have some rapid climate ... disasters ... stupid ... the competition is very clear ... it invests the authority in Congress ... to ... ALM issued at ten grams that authority ... to the Treasury received nothing in the fourth amendment ... that would allow the president to ignore the debt limit ... moreover ... it would be extremely de stabilize and for markets if the president went forward with some highly contested hearing ... associated with the issuance of debt the only path forward ... that is clearly enunciated constitution that clearly consistent ... with ... effectively function financial markets would be for Congress to do is to dozens of times and raise the debt ... so basically ... he has no real way out in even if there was a would be so messy that probably would ... economically useful ... craft has a very simple thing here that we know works which is to raise that to ... return to the broader economy for a moment for ... the last several years the economy has been disappointingly slow it's been growing for four years now but ... the forecasts are always going to do well and then ... as the year goes on something goes wrong ... um why do you think the economy isn't growing fast or is it all because of what's going on in Washington with taxes spending policies or something else ... we first arrived at contests ... on a little that a fair characterization ... in that for sample per capita GDP is higher now than it was before the financial crisis and that happened more quickly ... than you typically see the GDP per capita retained ... on in the event of the financial crisis has financial crises have these long lasting effects ... as they make it harder for households and businesses ... to do the type of borrowing investment residential construction ... that typically is what gets us out so I can compare to other countries around the world ... compared to a lot of past experience with financial crises ... aam were doing quite well ... course we don't want to degrade not occur ... and that's why we're always striving to do things like put in place Jobs mantras and infrastructure business tax reform ... and help overcome some of things like the fiscal headwinds faced with the sequester of last year ... giving it if we could get past the debt ceiling and short-term funding problem that ... we're in a position where the president could negotiate with Congress on some of those bigger issues infrastructure ... I'll listing some of the constraints on spending tax reform would be to long-term deficit reduction on absolutley president is ... once you get through CR and Dublin deal with the matter ... is very willing to negotiate ... on ... creating jobs and our fiscal future the type of negotiation involves a given that you've been around Washington a long time to think there's a chance of that actually happened we could be in a better place I certainly think it's in our economic interest to have a negotiation ... everyone from the ... IMF ... to come in the United States that said we should be doing more ... on jobs up for it ... and ... more of ... the fiscal consolidation over the medium and long run ... we clearly need more investments in infrastructure we clearly need better training clearly the business tax reform ... a lot of these are things we hear hear from the business community from economists from left and right and hence no reason should be Obel to do that ... a lot of focus lately ... when it's not about to shut down on Obamacare the launch of the Affordable Care Act and as you know ... there some people who say it's hurting job creation that employers are being ... discouraged from growing down fifty workers or ... sit to keep their workforce part time or something ... you use you see you don't see it that way so how do you think ... a The Affordable Care Act is affecting the job market ... and the broader power healthcare costs affecting the market ... well first of all we see no evidence the data that has been an increase in part-time work in fact this cyclical recovery ... in terms of part-time versus full-time employment than typical about ninety percent of the jobs full time ... the story that I think is good and are told is always the Affordable Care Act will improve the functioning of job market many does want ... her insurance he insults fully in effect in twenty fourteen summoned me to be on that and that includes ... people not being locked into a ... job at hand ... because they need to keep your health insurance that includes ... reduced disability absenteeism better performance on the job ... and find the most fundamentally ... on it means the slowdown in the region for the health costs ... some of which gets France on ... turns out this as savings incentive compensation ... and that means extra jobs I think ... all of these are important aspects of the Affordable Care Act ... know when they know that they got their job because health costs for slower ... I'm ... that that doesn't mean that they get when you think that the recent slowdown in the pace of health care cost increases is likely to persist pm The ... Cupertino next couple years yes I think it's becoming increasingly clear that it is not primarily a cyclical phenomenon related to the economy ... but it's something structural related to the state of health care ... and I think there are elements of that the only aam started to play themselves out for example ... on bundled payments are ... accountable care organizations are two things that are ... really just starting to take offs I have ... he has a lot of reason to believe that in the longer run slow down well with the national level ... and potentially slower than later ... and what about the ... the exchanges the marketplaces you think that if they get up and running battle have an effect on the ... rate of increase in health care costs ... I think that will ... lower health care costs at the Gabba primarily be on a level of fact ... and that means health costs would permanently be lower as a result of that that's certainly something that the Congressional Budget Office said when they look to their analysis one of ... the ... two are the most dysfunctional parts of the market ... for the individual market and small group market and this reduces administrative costs ... reduces ... on incentives and waste associated with underwriting ... and increases competition so all this wasted should improve ... two of the worst functioning parts of our health system in terms of cost and quality ... we ask about one other sector the economy's my attention energy how big a development in our long run growth is the fact that we're now producing more more wrong with gas I got some really important and I'll ... just say that the Wall Street Journal reported ... on the issue is that there is or ... I would ever have read and I went to fact check that I couldn't get all the facts of ... that going entirely ... the fund ... on that on Oct lovers to this for months it's hard to ... stick to check some of these things but aam ... the VIX's overtaking Russia ... in terms of the production of oil and gas ... we are almost to the point where our domestic production is exceeding our imports ... and she did exactly what does that domestic production is on the domestic consumption is down ... and helped her trade balance that helps our environment it helps our and the energy security and national security ... and I also think it's associated with productivity growth ... and jobs ... I believe it ... when to say that